Managing Innovation: Theories and Application of Blue Ocean Strategy

This document discusses the importance of innovation in business and the role of innovation management. It explores the theories of innovation, including diffusion of innovation theory and blue ocean strategy. The document also provides a case study of Deliveroo and its application of blue ocean strategy. It highlights the process and benefits of implementing blue ocean strategy in business.

Managing Innovation

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAINBODY...................................................................................................................................3
Theories of Innovation.................................................................................................................3
Application of Blue Ocean Strategy............................................................................................8
Historical Development.............................................................................................................10
Application of Diffusion Theory in the future development.....................................................11
Recommendation.......................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Innovation is the procedure of involving and applying multiple activities to disclose new
ways to improve people living standard. The main goal of the innovation to resolve customer
problem by meeting their needs and make the world a better place whereas they can live their life
effectively. Innovation supports organization to build dynamic capabilities which leads
competitive advantage and differentiate brand from others as well in the business market. While
innovation management refers as a combination of the management of the innovation and change
management effectively. It is important for the organization’s success because it helps to
transform new idea into realistic method or product which leads financial benefits within
company as well as differentiate brand from others. To understand role of innovation has an
example of Deliveroo company. The main objective of the report provides understanding about
innovation that it’s significance in business through two innovation theories.
MAINBODY
Theories of Innovation
There are numerous theories of innovation i.e. blue ocean and diffusion innovation
theory. these are worldwide famous theories that helps to gain competitive positioning in the
business market. Innovation theories are described as following:
Diffusion of innovation theory
It is one of the most famous and common theory that express the way communication
procedure explore an idea or good based on large group of people living in the community.
Individuals get aware about current trends and technologies and requirement or expectation to
buy certain products to think that it is innovative and creative at the same period fulfil needs of
them in precise manner (Franceschinis and et.al., 2017). Organization must aware about its target
customers’ needs and expectation for whom company plans to introduce services, products or
ideas. Diffusion innovation theory is further classified into five broad categories from which
organization can create various strategies to encourage people to accept innovation. The
categories are described as follows:

Innovators: This category involves only those people who are highly interested to adapt
innovation and introduce new goods and services for satisfying customer’s needs and demands
effectively. So these type people are known as first person who take initiative to lead new idea or
innovation in the society after that to know that it can be prove risky for them (Scott and
McGuire, 2017). Thus, these types differentiate themselves from others.
Early adapter: In this category includes those persons who have prior knowledge about emerging
trends and innovation that helps to adapt numerous changes earlier without any delay. These
type people do not need extensive information to encourage their customer to make buy products
or services of the firm as they have prior awareness of change and innovation which have to lead
in society.
Early Majority: It consist those people who adapts certain technologies or innovation based on
success stories of the people to analyse about effectiveness of innovation or technology. So they
does not include in leader’s category because they track those people who are satisfied with
innovation or technology before implementing such ideas or products within their firms.
Late Majority: This category adapts people who follows change or innovation after seeing,
analysing and evaluating that large group of people have followed such innovation (Zhang and
et.al., 2019). In the same period, they also examine that how such innovation is enabled to fulfil
customer’s need and demand successfully. Based on the evaluation these people decide to adapt
change or innovation.
Laggard: Those people who always finds difficulties to influence customers to buy certain
products and they are bound through their custom and tradition. These type people are promoted
to adapt change or innovative ideas or products through pressure from other competitors or
people to adapt such innovation.
Process of diffusion innovation theory
The procedure of developing innovative products or services to fulfil expectation of users
then it plans way or method to influence awareness in people about new product and services or
innovative ideas to promote early adapters. When products enable to fulfil needs and expectation
of people then large group of people initiates purchasing through analysing and evaluating

benefits of goods. In the same period, it influences those people who are highly stick with their
old tradition and customs due to fear of risk. Thus, diffusion innovation theory encourages
people to use innovative products.
Benefits and drawbacks of theory
Advantages: It influences people to buy innovative products by analysing and evaluating
experience of innovative products as well as encourages other people to choose products or
services from specific organization (Gomes and Osman, 2019).
Drawbacks: It is majorly focused on adaption of behaviour instead of prevention of individuals
attitude which can dissatisfy requirement of people who are highly believe in their tradition and
culture.
Blue Ocean strategy
Blue Ocean Strategy is another highly popularized innovation theory that is adopted by
organizations to differentiate brand from others. The main goal of the strategy is to meet needs
and expectation of customers or people by introducing products or services which holds superior
qualities and features so that they are ready to pay extra. With this strategy such products or idea
are introduced that does not have any competition and improves living standard of people in the
society (Shin and Hall2018). Most of the MNC’s companies targets high class people because
they are only focus on quality and services of products instead to money and to get superior
quality in product or services ready to spend extra money. So, such kind innovation has high
potential and power to meet preferences of the user beyond their expectation. It is effective and
more innovative theory instead of red ocean because it is mainly focused to influence
competition market share and in return reduces profit margin of the company.
Principles of Blue ocean strategy
Blue ocean strategy have four type principles that can support organization in growth and
success of business by following all principles of blue ocean strategy. Principles are described as
follows:
Reconstruct market boundaries

Organization must develop market boundaries by thinking such kind innovative strategies
that takes it in high standard from competition and generates high profitability within business.
So, innovative strategies and ideas are enabled to fulfil expectation of users.
Focus on big picture
Organization mainly focuses on to think something extra innovation which is beyond to
expectation that people are not enable to get from available markets. So it analyse and evaluate
needs and expectation of customers deeply in order to satisfy their requirement and more to be
creative for fulfilling their expectation.
Beyond existing demand
According to the principle organization focuses to attract future financially strong users
who are not buying existing available goods or services in the market due to certain issues. So,
organization determine different ways to fulfil preferences and expectation of such kind users
who enables to grow and expand their business activity.
Getting strategy sequence right
it is last principle of blue ocean strategy whereas it focuses about different risks that
organization faces while adapting of new ideas, innovation and products through retailers,
customers and partners (Leavy, 2018). Thus, organization raises ways to remove numerous
barriers in effectively followed of ideas, products and services for attracting large group of
people and influence it’s sales revenue and sales margin as well. The organization that
implements all principles in it’s practices is enable to adapt blue ocean strategy and differentiate
itself from other in competitive industry.
Process of Blue Ocean strategy
There are numerous steps and procedures to be implemented to develop blue ocean
strategy to influence profitability and sales volume of business. So, there is five principles that
are needed to be followed by corporations to adapt blue ocean strategy successfully are discussed
as follows:
Selection of target market or target audience

It is initial stage whereas organization has to determine and numerous business or
products that are innovative nature and can take fist adaptor advantage. It means product and
services are produced or offered by limited number of businessmen that supports firms to gain
competitive positioning in the business market.
Clarity about current state of organization
In it organization must analyse and evaluate that where it stand in it’s market through
analysing it’s brand positioning, sales or resources and profitability. When organization analyse
all factors deeply then enable to know about it’s products or services which are required to be
improved. Thus, organization can improve it’s positioning and market share within business
market.
Identify strengths of business
In it organization requires to determine strength and capabilities which can be used to
manufactured or offering goods and services as resultant it can bring hidden opportunities and
enables to fulfil needs and requirements of users beyond to their expectations (Jaswal, Tewary
and Sharma, 2018). Thus, firm enables to grow and expand it’s business by resolving the issue of
people and fulfil their needs effectively.
Find way to implement blue ocean strategy
Int his stage, organizations re-express market boundaries and develops new ideas or
market space so that users can easily determine such organization and it’s goods without any
confusion. It can be done by diversifying itself through superior quality of products or decline
cost of the goods.
Make Move
It is last stage of blue ocean strategy process whereas organization decides a particular
way to expand and grow it’s business dynamic capabilities by redefining market capabilities
through analysing and evaluating market results which has arrived due to successfully adapting
blue ocean strategy.
Advantage and limitation of blue ocean strategy

Advantage
High rate of return: With implementation of blue ocean strategy organization enables to get high
profitable output (Rahman and Choudhury, 2019). It helps in influencing sales and profit margin
of the business; at the same time, it can stimulate high price from large number of users.
Disadvantage
Requirements of high funds: Organization must have innovative resources and products for
differentiating itself from others. So, it needs large amount of funds and resources to achieve
superior positioning in it’s business sector.
Application of Blue Ocean Strategy
Deliveroo is an online food delivery organization which is headquartered in London,
England, UK. It run it’s business more than two hundred cities around the world and offers
online food delivery services to the customer. It has numerous subsidiaries i.e. Deliveroo
DMCC, Deliveroo Hong Kong Limited and others which operates in multiple countries across
the world and offers online delivery services (Saputri and Mulyaningsih, 2016). It comes in
exitance in 2013 means it have been passed only 7 year but after that it is most famous company
in the world. 5,699 employees are occupied in the company and offers it’s services to the
customer effectively. It is famous as quickest growing star in UK because it has captured large
market share on it’s product or services.
It is a hyper local food delivery start-up of United Kingdom whereas business model is
very simple but keeps difference from traditional start-up business vertical. For example, most of
the start-ups in the vertical work lists offerings by restaurants whenever customer place orders.
while Deliveroo is quite different because its posses’ more than 450 staff (drivers and cyclists)
who delivers food from restaurant to customers. Deliveroo takes delivery charge on each order
from the customer (Joyce and Paquin, 2016). To get success and align resources effectively uses
business canvas model by the Deliveroo.
Business Canvas Model

This framework gives specific shape of a business plan without developing uncertainty
and confusion within business. The model contains nine components that supports to identify key
drivers of the organization. Deliveroo’s business canvas model is described as follows:
Key Partners
 Technology
providers, riders
and insurance
are key partners
of the company
that helps to lead
high profitability
within business.
 Network of
highly famed
restaurants are
also considered
main key partner
of the business.
Key Activities
 To provide best
delivery services
and maintaining
a platform are
key activities of
the business.
 HR, customer
service and
global expansion
and operation
also another key
activity that
supports
company to gain
competitive
advantage.
Value Proposition
 Organization has
aim to lead
world’s best local
restaurant into
everyone’s home.
 It’s staff
members delivers
products or food
services to the
customer within
32 minutes.
 For restaurant it
provides super-
fast food delivery
services so that
they do not need
to invest high
funds on online
food delivery
system.
 Organization
offers extra
chance to riders
and cyclists to
earn extra income
except working
day salaries.
Customer
Relationships
 Organization
offers Hyper local
food delivery
services to the
customer
 Offers trial for
Deliveroo plus
subscription
service
 It offers risk
reduction, high
accessibility and
convenience
services to the
customer and
restaurant.
Customer
Segments
 Premium
restaurant,
corporate
accounts and
consumers are
major customer
segment of
Deliveroo.
Key Resources
 Software
platform, strong
network of
hundred top
most local
restaurant
association,
software
engineer are key
resources of the
company.
Channels
 Blog, social
media, websites
and mobile
software etc. used
by organization to
promote it’s
products services.
Busines
development
team approach
also uses by

 In addition, food
delivery culture,
brand, packaging
of food that
manage
temperature as
long as possible
are other key
resources that
helps company
maintain
wellbeing of the
customer and
business as well
(Zheng and
et.al., 2018).
organization to
communicate
with potential
restaurant.
Cost Structure
 Organization uses marketing expenses and cost of the
drivers who register themselves as freelancers.
 Cost structure is decided based on customer support
and internal salaries of individuals within company.
Revenue Streams
 Deliveroo offers Deliveroo plus subscription and
commission that take from restaurant for each
order or parcel etc. generate high revenue within
business.
 In addition, organization takes extra charge like
2.50 euro for delivering food in flat to the
customer. Thus, organization enables to generate
high revenue in it’s business market.
Historical Development
Deliveroo implements blue ocean strategy to launch online food delivery services from
top famous local restaurant to the customer which was beyond the expectation of the customer
and users. It has aim to become innovator that is not for taking competitive advantage. The
vision of the organization to follow this strategy is to offer such services that improves food
experience of each customer effectively. Online food delivery means organization permits
consumers to order food products from any restaurant as per their choices at any location
whereas they want. To innovate such services has aim to fulfil next generation needs. Deliveroo

followed all five stages of blue ocean strategy to innovate it’s services (Ojasalo and Ojasalo,
2018). In first phase is thinking that must extempore of everyone. In initial phase organization
thinks about food delivery services so that it enables to meet each customer’s objective which
they expect only. The organization creates succession planning involves human resource, riders
and cyclists, logistic department technologies, strong network of top restaurants and others
online networking channels. These are major people who helps Deliveroo to work on it’s this
project by keeping their viewpoints on issues that may occur while operating this business.
Deliveroo hires diverse cultural staff who keeps more knowledge about their culture and more
creative. When company starts to delivery food services to the customers from restaurants as per
their demands then it thinks that if customer gets direct accessibility to order food from
Deliveroo. com instead of restaurant food delivery choices. Later on, organization offers
Deliveroo plus subscription facilities to the customers whereas they can direct communicate with
it’s staff member and can order food from restaurant as per their choices. However, internet
plays effective role in the firm because it helps to transform idea into reality in term of services.
Thus, organization bring this new innovative idea first time in UK after that there are lots of
competitors who copied this services but it has stand it’s high positioning in the business market.
Application of Diffusion Theory in the future development
This innovation theory can follow Deliveroo.com that helps to give more innovative
delivery services that influence customer to pay extra something to get such delivery services.
Diffusion theory contain five broad categories of people such as innovator, early adaptor, early
majority, late majority and laggards. Organization can use this innovation theory to categorize
itself in broad classification then it helps to understand company that what they want to be. It
assists Deliveroo to identify which strategy must apply that makes them innovator and early
adopter (Keane, Cormican and Sheahan, 2018). This innovation theory is not helped organization
to differentiate it’s brand but also helps to become future innovator.
Recommendation
Organization must use Deliveroo support team approach that helps company to
answering all questions or concerns related to fees, technology, equipment’s, account detail
updates and app regarding issues. With the approach organization enables to resolve all issues
and maintains wellbeing of employees and customers with the business. Support team is not only

provided supper but also it offers different type of supports like accident support, emergency
support, live support and others. such kind support empowers riders and influences them to give
effective food delivery services to the customer in minimum time (Drahokoupil and Piasna,
2019). With this approach organization enables to gain high positioning in multiple countries and
generate high profitability on it’s services. Organization can use rider kit approach that helps
riders to be safe while driving in the road as well as maintain wellbeing of individuals within
company. Rider Kit is innovative approach for Deliveroo because no organization or food deliver
centres implement this approach. So, organization can introduce this new approach that brings
high productivity of employees as food deliverer and also differentiate riders from other food
delivery vehicles. Thus, company can get profitability and more valuable for the customer if it
implements this approach.
CONCLUSION
This report can be concluded blue ocean strategy and diffusion innovation theory that
supported company to become fist innovator by innovating such delivery services which are
beyond to the customer expectation and fulfil existing generation needs as well as future
generation. It has been summarized definition, principles, process of innovation theories i.e. blue
ocean and diffusion innovation theory. Business canvas model also used by organization to align
it’s key elements which gave a shape to the business has been evaluated in the brief study. It has
concluded implementation of diffusion innovation theory for the future development in this
report. Historical development of Deliveroo by implementing innovation theory can be
concluded in this report.

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